Tesla is facing a $440m (£363.5m) writedown on its Bitcoin holdings when a digital currency value slumps. This company, Elon Musk, bought a BTC value of $1.5b the previous year in a radical move. It makes Tesla the biggest company moving a part of its cash reserves into cryptocurrency.
But recently, people have experienced a massive crash in BTC as it reduces to an 18-month low. As a result, their bet has turned heavily loss-making. The final day of the second financial quarter was on Thursday, and BTC made around $19,000 trading, due to which the company’s value became an estimated $820.8m.
Also Read: Solana Beats Ethereum In NFTs Transactions
Value of Bitcoin Tesla held
Tesla recorded the BTC value at $1.26bn three months ago. The company has experienced the value of its holdings close to $2bn. Accounting practices indicate that Tesla doesn’t register gains on its investments until it sells.
The company will record an impairment on its Bitcoin holdings of around $440m. The value is similar to 9pc of its annual profit last year while reporting quarterly later this month.
The cost of the cryptocurrency has decreased by 60pc from $46,700 at the year’s beginning. It goes almost 75pc in November, and the number reaches high for all time. Interest rates are rising, and inflation has increased also. These have dulled interest in digital assets, whereas crises affect the prices of cryptocurrency companies.
The company used BTC or bitcoin as a payment process for the previous year. But it has suspended its use after Mr. Musk increased concerns about its carbon footprint. According the richest person worldwide, didn’t sell any cryptocurrency investments and told it last year. Many companies there have converted parts of their cash reserves to BTC. For instance, companies like Jack Dorsey’s Block, Coinbase, and MicroStrategy have experienced the situation as digital currency slumps. If we discuss, a total of $1.3 trillion has been wiped off this year.
You should know that the full name of Mr. Musk is Elon Reeve Musk. He is an investor and business magnate. Besides, Mr. Musk is the CEO and founder of SpaceX. In addition, he is also the Chief Engineer there. Moreover, he is the CEO and angel investor of Tesla. He is also related to the Product Architect of Tesla,
He set up The Boring Company and also is the co-founder of Neuralink and OpenAI. In addition, he became the wealthiest person with US$221.4 billion as of July 2022.
What did Elon Musk say On Tesla’s loss?
According to Elon Musk, his company must cut around 10pc of its salaried workforce. The reason is that the new factories in Berlin and Texas get burnt through massive cash slams.
According to the Tesla chief executive, an imminent US recession is predicted. 44pc has been lost for the company this year amid a widespread sell-off. The company is facing problems in meeting the demand for Shanghai’s lockdown and closing the company’s plant.